Annualized Funding Rate vs Basis Trade

The funding rate per settlement period expressed as an annual percentage; calculated as rate per period × settlements per day × 365; used to compare funding cost across different assets and time periods; above 30% annualized indicates crowded long conditions; below -15% indicates crowded short conditions.

A market-neutral derivatives strategy that earns the funding rate premium by simultaneously holding a long spot position and an equivalent short perpetual futures position; the two legs offset each other to create a delta-neutral position that collects funding payments from the short leg.